Your parents may have pleaded with you to be more mindful of budgeting, or at least to stop spending so much money on Ubers. While tracking your expenses and implementing a set amount of spending money for certain items per month sounds like a chore, the truth is that it’s a necessary skill students should learn before entering the real world. Although college students are notorious for complaining about how broke they are, budgeting for college is far simpler than for life after graduation. Learning how to live within a certain budget for food, clothes, going out, transportation, etc. will be extremely valuable after graduation when you have to factor in living expenses (rent/utilities, cell phone bill, insurance). Budgeting can be scary – finally calculating how much of your first post-grad paychecks will go to seemingly anyone but you – but understanding the basic principles behind personal finance can make all the difference.
1. Credit
Your credit is basically an indicator if you’re good for the money that you’re spending, meaning you can make timely payments on your credit cards. It also serves as your reputation with banks so having good credit could help you get loans and other services in the future. You can monitor your credit by checking your credit score report.
2. Savings
Saving money is always a good idea! This becomes more important later in life but starting to save in simple ways now could make the transition out of college way easier. Some examples are: limiting how many times you eat out/order food per week, cutting down on overpriced PJ’s, bring cash instead of card when going out, etc.
3. Taxes
Taxes can turn getting your first job from n an exciting experience into a very stressful one. In my case, I had no idea how to fill out W-4 or I-9 tax forms (at what age should you have your social security number memorized???). Essentially, the I-9 is Employment Eligibility Verification (verifies age, identity, citizenship) and the W-4 helps your employer to determine how much federal tax the can withhold from your paycheck (filling out this form accurately can help you save money on taxes by paying incrementally vs. lump some).
Thankfully at this point, the largest monetary decisions most of us have to make is forcing ourselves to use meal swipes so we don’t run out of Wavebucks, but becoming financially literate now can save you a lot of anguish later – or at least ensure that Top Ramen dinners end in college.